For Resource Use to Be Allocatively Efficient,when the Marginal Benefit

question 339

Multiple Choice

For resource use to be allocatively efficient,when the marginal benefit of a slice of pizza exceeds the marginal cost,________.

• A) more slices of pizza should be produced
• B) fewer slices of pizza should be produced
• C) no more slices of pizza should be produced
• D) allocative efficiency is reached only if the marginal benefit exceeds the marginal cost by as much as possible
• E) None of the above answers is correct.

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Definitions:

Voting Shares

Shares of stock that grant the holder the right to vote on corporate matters.

Cost Method

Accounting for investments where the investor does not exercise significant influence, recording the investment at initial cost and recognizing income only when dividends are received.

Unrealized Intercompany Gain

Profits recorded on the books resulting from transactions among subsidiaries that are not realized until sold to an external party.

Income Tax Expense

The total amount of income tax a company or individual owes to the tax authorities for the current fiscal year.